South American Gas Markets and the role of LNG
South America has long been isolated from other natural gas markets, focusing instead on achieving self sufficiency and regional integration. As a consequence, it has never been at the centre of discussions in the natural gas industry until the region decided to turn to Liquefied Natural Gas (LNG) in 2008 following shortages of natural gas production, tensions over price renegotiations and shortfalls of contracted deliveries. LNG imports only started in the late 2000s but reached 17.2 billion cubic metres (bcm) in 2015. Despite relatively small volumes at the global scale, representing less than 5% of the world LNG trades, if the pace continues, the region could become an important player reducing the scale of flows to Europe, the swing market for LNG. This was the starting point of this research, which was carried out with the objective to propose an overview of the gas demand fundamentals to 2030 horizons in a comprehensive way with some highlights of individual market trends (the paper focuses on Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela). The scenarios will need to be updated as policies/prices/generation mix evolve in the future, but the main conclusion of this research is that, as of mid 2016, South America is not expected to be a major future LNG market unless there are extreme climatic conditions, which will not happen every year and will not last many years. LNG will remain necessary to supply much needed flexibility, additional volumes, security of supply and to reach new markets far from infrastructure, but there are also major uncertainties on volumes, prices, timeframe, location and even direction of the LNG flows as some importers could turn exporters at times of low demand toward the end of the timeframe.